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Loss of use insurance

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Frequently asked questions about loss of use insurance

Loss of use insurance is one of the most common types of policies small businesses across New Zealand rely on to mitigate the risk of a vehicle being out of action following a claim.

Loss of Use Insurance Requirements and Coverages

Loss of use insurance is designed to protect you from the financial impact of not being able to use your insured vehicle. However, the insurance isn’t as simple as it sounds and consists of four primary sections:

The Covered Causes

Not all damages to your vehicle may be covered by your loss of use insurance. Only losses or damages accepted by your insurance policy qualify for the cover. This typically includes accidents, theft, fire, and other specific situations outlined in your insurance policy.

Coverage Limit

The reimbursement is capped at a maximum dollar figure per day (typically $30 per excluding GST). It is also capped at a maximum period (typically 30 days.) This is the maximum amount and duration the insurance company will pay for loss of use.

Excess Amount

The excess for the policy is typically a duration of time before the policy starts paying. This means that you will be responsible for bearing the cost of loss for the first x number of days, and your insurance coverage will kick in after that.

How to buy loss of use insurance with Gerrards

Purchasing loss of use insurance through Gerrards is a simple and efficient process:

Loss of use quotation process

We can secure multiple quotes from top insurers within 24 hours. This allows you to compare the best rates and choose the most suitable coverage for your business needs.

Advisory services

Our expert team can advise you about the right coverage limits and tailor a plan that best fits your business requirements. We can also help you understand the terms and conditions of the policy to ensure there are no surprises down the line.

Insurance certificate

Upon finalizing the insurance policy, we will issue a loss of use insurance certificate that serves as proof of your coverage.

Industries we cover

Gerrards offers loss of use insurance for all industries. Whether you run a small retail business or a large manufacturing plant, we can provide an insurance solution that fits your unique needs.

Coverage amount

Determining the right amount of loss of use insurance depends on several factors, including your business operations and the potential financial impact of losing the use of your vehicle. Our team can help you calculate an appropriate coverage amount based on your specific circumstances.

Loss of Use Claims

In the unfortunate event of a loss, making a claim with Gerrards is straightforward:

What is the loss of use claim process

To initiate a claim, simply contact us. We will liaise with the insurance company on your behalf, advocate for your interests, and handle the paperwork to ensure a smooth and swift process.

What are loss of use insurance claims examples

Consider the case of a local flower delivery business. They had a van that they used for all their deliveries. One unfortunate morning, they discovered the van was stolen from their premises. Being a small business, they couldn’t immediately afford a replacement vehicle, so they had to hire one to continue their services. Their loss of use insurance policy covered the cost of hiring a replacement vehicle, allowing them to continue their operations without a significant financial setback.

A renowned pizza delivery company, had one of their delivery motorbikes damaged in a small fire at their premises. The motorbike was essential for their deliveries, especially during the dinner rush. While the fire was quickly contained, the bike was significantly damaged. Their loss of use policy kicked in and provided reimbursement, enabling them to rent another bike and ensure their pizza delivery wasn’t interrupted.

A building contractor heavily relied on their truck for transporting materials to different sites. One day, the truck was involved in an accident and suffered severe damages that required several weeks of repair. Thanks to their loss of use insurance, they were able to rent a replacement truck. The financial reimbursement from their insurance allowed them to continue their operations smoothly while their original truck was being repaired.

A logistics company had a lorry damaged in a severe storm. The repair process was estimated to take a few weeks. They couldn’t afford to halt their operations during this period, so they rented a replacement vehicle. Their loss of use insurance covered the rental costs, enabling them to maintain their service schedules without additional financial burden.

Is loss of use insurance worth it?

Loss of use insurance can be a crucial safety net for businesses relying heavily on their vehicles for daily operations. 


  1. Financial Protection: Loss of use insurance can provide financial protection against unexpected costs associated with not being able to use your vehicle due to covered damages. The insurance can cover the cost of hiring a replacement vehicle or provide a daily reimbursement, ensuring your business can continue to operate with minimal disruption.

  2. Business Continuity: If your business is heavily reliant on vehicles, any downtime can have a significant impact on your operations. Loss of use insurance provides assurance that your business can continue functioning even when your primary vehicle is out of service.

  3. Flexibility: The insurance provides financial reimbursement when a replacement vehicle is not available, offering flexibility in how you manage the situation and use the funds.

  4. Peace of Mind: With loss of use insurance, you have the peace of mind that unexpected incidents won’t cause significant financial strain or halt your operations, allowing you to focus on running your business.


  1. Additional Cost: Loss of use insurance is an additional cost on top of other insurance premiums. Businesses should balance this cost against the potential financial risk of vehicle downtime.

  2. Limited Coverage: Not all types of damages may be covered by the policy. For example, regular wear and tear, mechanical failure, or damages not accepted by your overall vehicle insurance policy won’t trigger the loss of use coverage.

  3. Coverage Limit: There is a cap on the daily and total amount you can claim. Therefore, if the cost of hiring a replacement vehicle or the income you lose due to vehicle downtime is significantly high, the insurance may not fully cover your losses.

  4. Excess Period: You’ll need to bear the cost of loss for the number of days stated in your policy, and your insurance coverage will kick in after that. This means some initial financial impact will still fall on your shoulders.

Loss of use insurance policy changes

Here’s what happens if you need to adjust or cancel your loss of use policy:

What happens if I need to change my insurance later?

Insurance is not set in stone. If your business situation changes, you can review your policy and adjust it as necessary. At Gerrards, we can assist you in reviewing your policy and making any necessary changes. 

What happens if I cancel my loss of use policy?

If you decide to cancel your loss of use policy, you’ll no longer have to pay the premiums. However, this also means you won’t be covered for loss of use. If your vehicle suffers damage and you lose income as a result, you won’t be eligible for the financial protection that loss of use insurance provides.

How does loss of use insurance compare with other policies? 

While both types of insurance involve vehicles used in a business setting, they cover different risks. Business vehicle insurance primarily covers the physical damage to your vehicle caused by events like accidents, theft, and natural disasters. On the other hand, loss of use insurance covers the financial losses you experience when your vehicle is unusable due to a covered event and you can’t generate income as a result. In essence, loss of use insurance is an extension of commercial vehicle insurance, providing a more comprehensive coverage.

Business interruption insurance covers the loss of income that your business suffers after a disaster, such as a fire or a flood, that affects your ability to operate. However, it does not typically cover loss related to vehicles. Conversely, loss of use insurance specifically covers the income loss when your business vehicle is unusable due to covered damages. Therefore, while business interruption insurance protects against income loss due to a wide range of operational interruptions, loss of use insurance specifically addresses the risk associated with your business vehicles.

Public liability insurance protects your business against claims resulting from injuries or damages to third parties (non-employees), either on your premises or when you’re working in a client’s home or business location. It’s a completely different type of coverage compared to loss of use insurance. While loss of use insurance covers your financial losses due to vehicle unavailability, public liability insurance covers the costs of potential legal actions brought against your business by third parties. They cover different risks and can complement each other as part of a comprehensive business insurance plan.

Do you have further questions about loss of use insurance NZ?

We hope this guide has shed light on the intricacies on loss of use insurance in New Zealand. However, we understand that every business is unique, and you might still have questions specific to your situation. At Gerrards Insurance Brokers, we’re here to help. If you have any further queries about loss of use or any other insurance need, please don’t hesitate to contact us. Our team of experienced professionals is always ready to provide personalised advice and solutions tailored to your business. 

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